Mar 13, 2017

The Obamacare nightmare scenario

The nightmare scenario for Obamacare is a meltdown of the individual health insurance market. If health insurers lose confidence as Republicans struggle with their repeal efforts — or because of the turmoil and price hikes that have already been underway — even more could withdraw, leaving Obamacare customers with nowhere to turn to keep their coverage.

Humana has already done this, raising fears that the meltdown could actually happen. But it's always a vague threat, with no real specifics. Katherine Hempstead and her research team at the Robert Wood Johnson Foundation helped Axios map out the likely impact if other insurers that have been on the fence decide to pull out.

Here's what it would look like: If insurers like Anthem decide to exit the exchanges for 2018, hundreds of thousands of people would be stranded without any available insurers. Some state marketplaces would almost certainly fall apart.

Data: Centers for Medicare and Medicaid Services and Robert Wood Johnson Foundation; Chart: Andrew Witherspoon / Axios

Humana is the source of the latest fears. The insurer said it was completely exiting the Obamacare marketplaces for 2018. That meant the coverage for more than 40,000 Humana members in Tennessee's individual market was thrown into disarray. Humana was the only option for them, and now it's unclear what will happen to those members for next year.

That's a sizable number of people, but Humana isn't a major Obamacare player. It will get even dicier if companies with larger memberships decide to bail.

"A lot of these big carriers have a big impact in their market," Hempstead said. "There's not a lot of room to play with if there are exits."

Here's what would unfold if each of these individual companies quit Obamacare, based on Hempstead's analysis for Axios. (Note: This only includes plans sold on the exchanges.)

  • Anthem: An Anthem exit would cause arguably the most disruption nationwide. Roughly 255,000 people across Colorado, Kentucky, Missouri and Ohio would have no Obamacare insurers for 2018, and 560,000 people in eight states would have just one insurer. CEO Joseph Swedish, who has demanded specific changes, recently supported many parts of the Republican repeal bill.
  • Centene: The marketplace in Mississippi would implode. If Centene left, 90,000 Mississippi residents would have zero insurers. (Humana is already leaving, and the state Blue Cross Blue Shield plan isn't participating.) Another 180,000 people across Georgia, Texas and Washington would have only one option.
  • Cigna: Tennessee would be hit even harder with a Cigna departure, as 105,000 people in 14 counties would have no Obamacare options. More than 275,000 people in six states would have one remaining insurer if Cigna bolted.
  • Highmark: Roughly 10,000 people in the Trump stronghold of West Virginia would have no insurers. States that are dominated by other major not-for-profit Blue Cross Blue Shield companies, such as Health Care Service Corp. and the Alabama Blues, also would see their exchanges crumble quickly if they left.
  • Molina Healthcare: Not a big impact here. One county in Wisconsin would be left with no Obamacare plans. Molina is still a big Obamacare carrier, but it operates in a lot of competitive areas that have other options.
  • Aetna and UnitedHealth Group: These two companies have already withdrawn from most of their Obamacare markets.

The bottom line: Health insurers need certainty very soon about what the individual markets will look like. The market stabilization rule has assuaged some industry concerns, but the Republican replacement plan has not. Molina's CEO told Axios the GOP plan "doesn't reassure me that the marketplace is going to be more stable in the future." And for every insurer that leaves, "it raises the stakes for the next carrier to leave," Hempstead said.

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